“Foreclosure starts and completions are down significantly from one year ago; and since January 2012, rising home values have lifted 2.4 million homeowners back above water. That said, we remain cautious because although mortgage delinquencies are trending down, they still remain quite high compared to historic norms.”

On Monday, May 6, 2013, Lender Processing Services reported that troubled home loans have hit a six year low as of March, the lowest since 2007. Negative equity has also dropped 41 percent since 2012. These numbers are nearly pre-crisis and are quickly approaching the conditions from the period between 2000 and 2004.

“There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” Blecher said. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average — at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent are actually defaulting at more than twice the national average. For those 50 percent or more underwater, we see new problem rates of 4 percent.

“Still, the overall equity trend has been a very positive one,” Blecher continued. “LPS’ latest data shows that the share of loans with LTVs greater than 100 percent has fallen 41 percent from a year ago. In total, there were approximately 9 million such loans, or about 18 percent of active mortgages. Some states, including the so-called ‘sand states’ (Arizona, Florida, Nevada and California), are still well above the national level, at an average 28 percent, but they, too, have seen improvement over the last year, with negative equity dropping over 40 percent across those four states since January 2012.”

Loan Processing Services also released data that shows the March numbers revealed an 8.2 percent month over month decrease in national foreclosure starts while foreclosure sales rose 10.1 percent. Recently, here in California, the Homeowner’s Bill of Rights was passed. The bill has limited certain troublesome lender practices such as dual tracking, requires a single point of contact to proceed with home foreclosure, and insures tenants’ rights if a lease is present. The California Homeowner’s Bill of Rights has contributed to the fall in foreclosure sales by 35 percent but has not affected the number foreclosure starts, which is on par with the rest of the country.

Previously we discussed that investors are purchasing homes in Sacramento and a recent development in this arena is the initial public offer of shares of Colony American Homes. While we hear more about Blackstone group in this area it should come as no surprise that other investment firms are buying up homes. With Colony American Homes going public the tenant landlord relationship may grow even more depersonalized. What was once a mom and pop operation for most renters is now turning into a professional, retail experience more like renting an apartment or multi-dwelling unit. Time will tell how well this model works for single family homes. The public offering is also good news for investors who would like to invest in real estate but may not have sufficient means to purchase a home at this time.

The housing market is still volatile. While certain regional markets are recovering and many national statistics are appearing more favorable, we must be cautious as many are still unemployed. If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 916.442.6400 or send me an email at tgreene@tedgreenelaw.com.

A recent report from Zillow shows that someone earning median income of $52,513 buys a home at the median price of $157,400, only 12.6 percent of their income would be required for mortgage payments. That is more than a third of the average pre-bubble; during the bubble the average was approximately 20 percent.

While it is an improvement for consumers there is still a large gap between income and home prices. During the bubble housing prices were nearly quadruple the amount of income of the average American. Home values are now approximately three times the median income – 15 percent more than the past average, relative to income.

At a time when renting and home buying seem to be approaching equal monthly cost it is almost harder than ever for those with credit which was previously considered good to buy a home. Young professionals are the lifeblood of the future real estate market. Homebuyers from that group typically will buy their first home and as their lives progress, children enter the equation, and the initial home becomes too small, a larger home is purchased to accommodate their needs. Without the first step of buying a home, at a younger age it is harder to establish credit and build wealth. The market may suffer in the future without entry of these critically important buyers.

Recent pricing gains have mainly been the consequence of decreased traditional inventory and increased sales volume. The shadow inventory of distressed properties is not typically taken into account. Short sales are not often advertised like equity sales and Many are heralding a housing recovery and possible boom (or bubble) but Fitch Ratings recently released a report about its concern over alternate economic factors. According to Fitch pricing may be inflated by up to 10 percent.

If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 916.442.6400 or send me an email at tgreene@tedgreenelaw.com or just visit my website www.upsidedownca.com.

Yesterday Distressed Servicing News published a report by Fitch Ratings that seemingly threw some cold water on the newly found hot real estate market. This article explains why the recent uptick is based on artificial stimulus which cannot and will not be sustained.

The article listed the perfect storm combination of factors of why we recently saw a good jump up in home values. None of these factors were based on good economic news.

This dreary forecast predicts that prices will actually drop in the middle of 2014!

Here are the key points:

– Unemployment is down ONLY because of people just plain giving up and falling out of the search for work and NOT because of good economic news.

– Pent up demand – many people stopped looking when the housing crunch hit.

– Ridiculously low interest rates.

– Very little “new home” construction.

– Investors buying homes for cash at an unseen pace.

The recent uptick has additionally caused some fence sitters to get back in but since they don’t have cash they can’t compete. They are struggling to find inventory which continues the uptick. Simple supply and demand factors at work.

Once the inventory level gets back to “normal”, and it always does seem to return then the basis for this article will materialize as predicted. They basically say we are in a mini bubble and it too will burst. I guess time will tell. I have never seen a market quite so unpredictable as we have seen the last few years and we aren’t done yet.

If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 916.442.6400 or send me an email at tgreene@tedgreenelaw.com or just visit my website www.upsidedownca.com.